India is preparing a major transformation of its steel sector under the proposed National Steel Policy 2025, aiming to expand production capacity to 400 million tonnes (MT) while reducing carbon emissions by 25% by 2035–36. This dual strategy reflects the country’s push to balance rapid industrial growth with climate commitments.
Currently, India produces around 168 MT of crude steel, and the planned expansion would more than double this capacity, driven by strong demand from infrastructure, construction, and manufacturing sectors.
A key pillar of the policy is reducing emissions intensity in steel production. At present, Indian steel plants emit about 2.65 tonnes of CO₂ per tonne of finished steel, which is significantly higher than the global average of around 2 tonnes. The policy targets bringing this down to 2 tonnes per tonne of steel by 2035–36, aligning India more closely with global benchmarks.
The steel sector currently contributes 10–12% of India’s total greenhouse gas emissions, making it a critical focus area for decarbonisation as the country works toward its long-term net-zero target by 2070.
To achieve these goals, the government is proposing a shift in production technologies and raw material usage. The policy emphasizes:
•Greater adoption of gas-based steelmaking to reduce reliance on coal
•Increased use of steel scrap and recycling
•Incentives for continuous emission reduction
•Expansion of gas infrastructure and securing overseas gas supplies
However, infrastructure gaps remain a challenge. Currently, only 21% of blast furnace capacity and about 5% of direct reduced iron (DRI) capacity have access to gas pipeline networks, which could slow the transition toward cleaner production methods.
The policy is also influenced by global trade dynamics. The European Union’s carbon border adjustment mechanism (CBAM) has imposed additional costs on carbon-intensive imports like steel, pushing India to decarbonise production and diversify export markets.
On the economic front, the scale of expansion is substantial. Achieving the 400 MT capacity target will require an estimated ₹17 trillion (around $183 billion) in investment and is expected to generate over 3 million additional jobs, strengthening the sector’s contribution to the economy.
Additionally, the policy aims to reduce dependence on imported coking coal, lowering it from around 90% to 80% by 2035, while promoting international collaborations with countries such as Australia, Japan, Germany, and the United States for technology and resource support.
Overall, India’s steel roadmap signals a strategic shift toward high-capacity, low-carbon industrial growth, positioning the country to remain globally competitive while aligning with evolving environmental standards and trade regulations.
